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Mumbai: Apartments costing up to 50 lakh saw brisk sales in the last financial year even as overall sales remained muted, real estate research firm Liases Foras said.

In 2015-16, sales of so-called affordable houses priced below 25 lakh rose 46% from a year ago in the top eight cities, including Mumbai, Delhi and Bengaluru, a Liases Foras report said. In the same period, sales of budget homes — costing 25-50 lakh — rose 13%.

With home loans getting cheaper in the last few months and property prices almost stagnant, sales in the low- and mid-income housing segment have surged in the last few quarters.

In the first three months of this year, the contribution of the affordable housing segment to overall sales in the top eight cities reached 10%, up from 7% in the year-ago period. The budget segment also witnessed a growth in contribution from 29% to 33%, said the report.

However, sales in the luxury segment, with prices above 2 crore, fell by 28% between January and March as compared to the same period last year. On an annual basis, overall home sales improved by 6%, data showed.

“The market is skewed towards end users rather than investors. There is also a change in the product setting. Developers who were only building large size units have also started putting smaller size units and even doing size correction," said Pankaj Kapoor, founder and managing director, Liases Foras, adding there has been size correction of most apartments by at least 5-10% in major cities in India over the last four-five years.

“Interest rate cycles have moved downside, helping people improve affordability. Besides, property prices have not moved up in the last one year," he said.

JLL India’s chief operating officer Ramesh Nair agreed that homes below 1 crore, particularly in Hyderabad, Mumbai and Bengaluru, are pushing overall home sales.

“After two years, the unsold inventory reduced owing to new launches being fewer and developers aligning to the market demand with respect to pricing and product offering," he said.

Real estate firm Tata Housing Development Co., which builds both affordable houses with prices starting at around Rs16 lakh and luxury homes at over 15 crore in the four metros, has also seen a pick-up in demand in the mid- and low-end segment.

“If both the price and location are right, people are ready to buy. A lot of stuff which ended up only as enquiries in the last two quarters have actually started converting to sales. People have been waiting for prices of properties to come down for a very long time. That has not happened and we don’t even think it we would happen in the near future," said a company official, who did not want to be identified.

For Tata Housing, sales have improved in few of its affordable housing projects like in Boisar, a suburb in Mumbai, where prices start from 16 lakh, while in Delhi, apartments in the range of 50-70 lakh are doing well. Similarly, in Bengaluru and Chennai, demand has increased for houses with prices between 30 lakh and 50 lakh.

Ashish Shah, chief operating officer of Mumbai-based Radius Developers, said 60% of the total 600 bookings for its recently launched Project Central Park in the city were for compact apartments with a size of 350-600 sq.ft of saleable area. A studio apartment costs about 50 lakh while a one-bed room flat at Project Central Park is priced at 77 lakh.

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